No bribes, no deal: In 2007, pipe-maker refused to pay $150K kickback; the product hasn't been used by Montreal since

In 2007, Ipex refused to pay a kickback; its product hasn't been used by Montreal since

MONTREAL — As sales director for a Montreal manufacturer of PVC pipe, Michel Cadotte had been trying for over a decade to get his company’s product used in the city’s aqueduct projects.

Then in 2006 a breakthrough came. After complaining to the head of the city’s public works division about substandard pipe he saw being installed at one site, he was invited to meet Nicolo Milioto, head of Mivela Construction Inc. and a major player in the Montreal construction industry.

Mr. Milioto was impressed by the pipes produced by Mr. Cadotte’s company, Ipex Inc.

“I got the impression he had ties with the city of Montreal,” Mr. Cadotte recounted Thursday before Quebec’s Charbonneau inquiry into corruption.

A little more than a month later, Robert Marcil, the public works head, issued a memo declaring from then on, due to “quality problems” with the cast-iron pipe that had been the norm, new projects would use an Ipex product called TerraBrute or its equivalent.

Mr. Cadotte, who was on vacation when the news came in, said he uncorked a bottle of wine to celebrate, and Ipex revved up production to meet short-term orders expected to be worth up to $800,000.

Then Mr. Milioto called him to another meeting in the fall of 2006. After some small talk, he cut to the chase.

“Mr. Cadotte, things are going well, it’s rolling. There’s just one thing that you need to know,” he said, according to Mr. Cadotte’s testimony.

“Because of the acceptance of your product by the city of Montreal, I’ve got some people to compensate.” Mr. Milioto said he needed $150,000 in cash to pay three unnamed city of Montreal officials “who did the work to get us here.”

Mr. Cadotte testified it was the second time in his 23 years as sales director he had been asked for a kickback. The first time was about 10 years earlier, when a private engineer said Ipex could be guaranteed of winning a municipal contract in the Laurentians if it paid a bribe.

If we don’t get on board, if we don’t give the money, we know that’s the end

The answer had been no back then, and Mr. Cadotte was certain it would be no again.

“We don’t get involved in projects where we make profits on the back of taxpayers,” he told the commission, headed by Superior Court Justice France Charbonneau.

After running Mr. Milioto’s demand by his superiors, Mr. Cadotte returned to give him the news: “Ipex doesn’t work that way.”

He figured Ipex was finished in Montreal. “If we don’t get on board, if we don’t give the money, we know that’s the end,” he testified. And to this day, Ipex has not been chosen to provide pipe for Montreal aqueduct projects, even though it sells its products to municipalities across eastern Canada.

We don’t get involved in projects where we make profits on the back of taxpayers

Commission counsel Denis Gallant produced an April 2007 memo from Mr. Marcil to his engineers, reversing his earlier edict and declaring TerraBrute would no longer be considered for city projects.

Mr. Marcil left the city in 2009 after it was revealed he had accepted a trip to Italy with another construction contractor, Joe Borsellino of Construction Garnier.

The commission has heard Mr. Milioto acted as a middle man between colluding construction companies and the Rizzuto crime family. The Royal Canadian Mounted Police recorded him entering a notorious Rizzuto hangout 236 times over two years. He was filmed receiving stacks of cash from various contractors, which he would then turn over to Mafia bosses.

Mr. Cadotte testified he got the impression Mr. Milioto was deciding on behalf of the city and of contractors what type of pipe would be used in the city’s waterworks.